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Guarding Your Wealth for Seniors
How Do You Like These Odds – 90% Incompetent Before
They Die
By Jeffrey D. Voudrie, CFP
Dec. 21, 2005 - Are you a gambler? Do you like to
play the odds? Here are some real-life odds for you to consider: 90% of
people become incompetent before they die! Of course, your spouse might
not think you’re of sound mind right now, but that’s beside the point!
If you don’t take action, you could needlessly cost your spouse
thousands of dollars and countless headaches in order for them to make
decisions on your behalf.
Competence refers to the ability to make rational
decisions about your affairs. For instance, if you develop Alzheimer’s
or dementia as you age, you’ll become incompetent. Two critical areas
are affected by incompetence—your ability to make your own financial
decisions and your ability to make your own medical decisions.
Unless you give someone the ability to make these
decisions for you prior to becoming incompetent, it will be left up to a
court to decide who should make these very personal decisions for you.
The person the court appoints may not know you very well and, as a
result, the decisions they make may not reflect your desires.
There’s a simple way to protect you and your
spouse. You can legally name someone you would want to make these
decisions for you ahead of time. Then, should you become incompetent,
that person you named can step in and make decisions for you without the
involvement of the courts. You choose them. You can also make them aware
of your wishes to better insure they are carried out. If you are single,
this is even more important!
The legal document that accomplishes this is called
a Power of Attorney. I recommend each person have one Power of Attorney
that covers financial decisions and a separate Power of Attorney that is
used solely for medical decisions. That way, you can name someone who is
financially minded to handle your money matters and someone more
compassionate to handle your medical decisions.
There are two types of Powers of Attorney (POA)—General
and Durable. The General POA gives someone the ability to make decisions
for you while you are competent. The Durable POA is only active while
you are incompetent. Many of my Private Wealth Management clients are
concerned about keeping control as long as possible, therefore, most of
them rely on the Durable POA. By the way, most Durable POA only spring
into action based on letters from 2 physicians attesting to your
incompetence.
Some people think their children will be able to
make medical decisions for them should they become incompetent, they
can’t without a POA. Spouses can make medical decisions for each other
but that’s it. One spouse cannot make financial decisions for the other
spouse. For example, if I were to become incompetent my wife, Julie,
would not be able to give any instructions or effect any transactions
within my retirement account unless she had a POA (she does).
One of my newer clients now wishes he heard this
several years ago. Chuck and his wife have been married forever and are
in their early 80’s. About 3 years ago Chuck noticed that his wife was
becoming a little forgetful. Dementia had begun and she slowly lost her
mental capacity. Like most couples, the real estate they own is in both
of their names. That way it will automatically go to the other spouse
should one pass away.
Unfortunately, Chuck does not have a Power of
Attorney over his wife. No one does. Therefore, he can’t sell any of the
real estate to use the money to help pay for her care. He doesn’t have
the authority to sign on her behalf and since she is no longer
competent, she doesn’t have the legal capacity to sign for herself!
To correct this, Chuck will have to go before a
court to become her conservator—a long drawn-out process that is
humiliating and cost thousands and thousands of dollars. He will then
have to appear before the court each year for the rest of her life to
account for his actions.
Don’t gamble like Chuck. Your attorney can
inexpensively draft Powers of Attorney for you and prevent countless
headaches. Do it now, before it’s too late. Your spouse and children
will be glad you did!
If you have a specific question or would like more
information give me a call toll-free at 1-877-827-1463 or go to
www.guardingyourwealth.com. You can also reach me by email at
jeff@guardingyourwealth.com.
About Guarding Your Wealth:
“Guarding Your Wealth” is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Please
visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive.
Guarding Your Wealth for Seniors are
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens. Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For booking information, email e-mail
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